One billion cubic feet extra gas by next winter: Dr Asim

September 2, 2012

KARACHI: Dr Asim Hussain, federal minister for petroleum and natural resources, on Saturday said that the energy shortage will be reduced significantly as around one billion cubic feet (bcf) gas would be added in the system by the winter 2013.

“Around one billion cubic feet per day is planned to be increased by the next winter, making sufficient gas availability in the country,” he said at a meeting with members of the Karachi Chamber of Commerce and Industry (KCCI).

Currently, gas production is estimated at around 4bcf per day.

Dr Asim said that the Petroleum Policy 2012 envisages significant improvement in the gas and oil production.

The Oil and Gas Development Company Limited (OGDCL) would enhance its production by 500mmcf, making its total production to around 1.4bcf by the middle of June 2013, he said. “Other gas well in Sindh would also contribute to make additional one billion cubic feet by next winter,” he added.

About crude oil, he said that the current 60,000 barrels per day production is planned to enhance to 100,000 barrels per day. “For this, the country will need more refineries,” he added.

Commenting on the gas infrastructure development surcharge (GIDS), he said, the government has already agreed to reduce it from Rs100 to Rs50 and a summary has been sent to the parliament for approval.

The surcharge was introduced for the development of projects including Iran–Pakistan gas pipeline, Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline, LNG terminals and other infrastructure. “It has a separate account for collection,” he added.

On the demand of the KCCI to further cut gas infrastructure development surcharge, he said, it was the act of the parliament and any change would be brought through the parliament. “However, the KCCI proposals will be forwarded to the government for consideration,” he added.

He highlighted the issue of gas consumption and production by provinces in connection with the 18th Amendment to the Constitution.

He said that there are misconceptions about the distribution formula of 50 percent consumption allowed in the constitution for a province where gas is produced.

The 18th Amendment is applied to gas wells, making production after 2012, he said.

Commenting on calculation of gas companies on rate of return, he said that the rate of return by gas companies on the basis of weighted average cost of gas (WACOG) was wrong. “They should calculate this on gas price,” he added.

The government is giving Rs40 billion subsidies on electricity and the country’s revenue collection is not sufficient to take burden of such huge amount. “This should be reduced,” he said, adding that the supply of gas should be ensured to all sectors of the economy.

Asim supported gas supply to the fertiliser sector as the government could not take burden of imported fertiliser in the shape of subsidies.

Rana Muhammad Farooq, federal minister for climate change and former minister for textile, said that the ministry of petroleum has key to resolve all industrial issues, which is facing severe energy crisis.

Around four million people are jobless due to the energy shortfall, which forced the closure of a large number of industrial units.

Earlier, Siraj Kassam Teli, leader of the Businessmen Group and former president of the KCCI, said that the government should not test the tolerance level of industrialists by imposing different types of surcharges.

The government has imposed gas infrastructure development surcharge this year and the increased the petroleum products prices, whereas “we are expecting relief due to the election year”.

Mian Abrar Ahmed, president of the KCCI, in his address of welcome said that it is the responsibility of the government to ensure gas supply to entire industry of Sindh as Karachi alone generates 70 percent of the revenue.

Zubair Motiwala, chairman of the Sindh Board of Investment, presented the demand and supply situation in the country.

He said gas tariff in per cubic metre in Bangladesh is 6.45 cents, while the same is 18.23 cents in Pakistan. “Due to high cost of production, Pakistani products are uncompetitive in the international markets,” he added.